Metaverse, Crypto Currencies, and iGaming: A story of new business models, explosive growth, and fraud
Metaverse, Crypto Currencies, and iGaming: A story of new business models, explosive growth, and fraud
What Happens in The Metaverse Does Not Stay In The Metaverse Texas Securities Commissioner Stops Metaverse Casino Securities Scheme
Content provided by Texas State Securities Board
Apr 13 2022
Securities Commissioner Travis J. Iles entered an Emergency Cease and Desist Order to stop a fraudulent investment scheme tied to metaverses. The order names Sand Vegas Casino Club, Martin Schwarzberger and Finn Ruben Warnke and accuses them of illegally offering NFTs, or non-fungible tokens, to fund the development of virtual casinos in metaverses.
The term metaverse—first coined in 1992 by science fiction author Neal Stephenson in Snow Crash—generally refers to one or more interconnected virtual worlds that typically promote interactivity, entertainment and commerce. Users access these virtual worlds through digital representations of themselves, often referred to as avatars, and socialize, play, shop, or even work in digital environments. Metaverses are becoming increasingly popular as corporations continue to invest in augmented realities and new technologies increasingly intersect with movies, video games, and popular culture.
“While many will say, ‘Meta-what?’ Metaverses—and the concept of a singular metaverse—present exciting new commercial and social opportunities,” said Commissioner Iles. “Unfortunately, bad actors often attempt to capitalize on hype to defraud the public.”
The order accuses the Respondents of leveraging interest in metaverses to perpetrate a high-tech fraudulent securities offering. According to the order, they are offering 11,111 Gambler NFTs in connection with their development metaverse casinos in popular metaverses such as the Sandbox, Decentraland, Infinity Void, and NFT Worlds.
The metaverse casinos reportedly act as real casinos except they operate in virtual worlds. Gamblers, acting through avatars, can enter the metaverse casinos and play poker and other games using cryptocurrencies. Purchasers of the Gambler NFTs profit from these operations. Not only do they become owners of the metaverse casinos, but they also purportedly share in half of the profits generated from the metaverse casinos—including profits from gambling and profits from the sale of digital assets representing drinks and cigarettes.
“The metaverse provides brands with new commercial opportunities, and many investors are now considering the latest high-tech products,” said Enforcement Director Joe Rotunda. “However, bad actors are now leveraging interest in these opportunities and products. Virtual reality can leave you virtually broke.”
The Respondents are also allegedly developing a virtual casino—a casino accessed not through metaverses but solely through the internet. They are offering 1,111 Golden Gambler NFTs in connection with the development of this virtual casino—referred to as their web 2.0 casino. Owners of Gambler NFTs and Golden Gambler NFTs own the web 2.0 casino and share in profits generated from the web 2.0 casino.
Owners acquire Gambler NFTs and Golden Gambler NFTs through minting—a term that refers to the publication of a digital asset on a blockchain—or purchase them from listings on an online marketplace. On April 9, 2022, the listing price for Gambler NFTs was between 0.23 ether or around $744.38 and 777.77 ether or around $2.5 million. On the same day, the listing price for Golden Gambler NFTs was between 2.13 ether or around $6,793 and 169 ether or around $547,000.
Respondents are touting the lucrative profitability of Gambler NFTs and Golden Gambler NFTs. According to the order, they are estimating owners of Gambler NFTs will receive between $102 and $2,040 per NFT per month or $1,224 and $24,480 per NFT per year. The Golden Gambler NFTs purportedly provide considerably more profitability. Respondents are estimating that owners of the Golden Gambler NFTs will earn between $540 and $6,750 per NFT per month or $6,480 and $81,000 per NFT per year, according to the order.
Respondents are advertising the Gambler NFTs and Golden Gambler NFTs through an internet website and a marketing campaign targeting social media influencers and enthusiasts. They are also promoting interest through frequent webcasts and AMAs, airdrops of voxels, and virtual lotteries for active social media users. They claim to have provided lucrative rewards to winners of these lotteries—rewarding their most active followers with an iPhone 12 Pro, a MacBook Pro, and an iMac, and promising to reward others with a Tesla in an upcoming event.
“Purchasers of any investment—from the traditional stocks and equities to the latest product—need to consider all factors, not just marketing campaigns designed to recruit purchasers,” said Enforcement Director Rotunda. “All investments bear risk, and these risks may significantly impact the bottom line.”
Cybersecurity is typically a key threat to online investment programs, and this case proves no different. For example, the Respondents claimed their social media was hacked in January 2022. The hacker allegedly used a bot to spoof a platform for minting NFTs and misappropriated 50 ether—valued at around $154,000 on the incident date—from followers.
According to the order, the Respondents are also advising followers that the Gambler NFTs and Golden Gambler NFTs are not regulated as securities, falsely claiming the securities laws do not regulate any NFTs. The Respondents are also devising a scheme to obstruct any attempt to regulate the Gambler NFTs and Golden Gambler NFTs, according to the order. They are misleading purchasers by claiming they can simply avoid securities regulation by implementing illusory features or using different terminology.
The Respondents are not registered to sell securities in Texas, and the Gambler NFTs and Golden Gambler NFTs are not registered or permitted for sale in Texas.
The Alabama Securities Commission also filed a contemporaneous enforcement action against the Respondents and the Kentucky Department of Financial Institutions assisted with the case. The Texas State Securities Board appreciates the assistance of Ricky Locklar and Miles Faggert of the Alabama Securities Commission and Chad Harlan and Brandon Adcock from the Kentucky Department of Financial Institutions.
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Crypto Casinos in the Metaverse – Atari Launching a Virtual Casino
Published by AMBCrypto.com
Press release provided by Digital Currency Group
Published April 16, 2022
By Anjali Sriniwasan
Atari is an iconic video game company that has managed to stand the test of time. It is now leading a new cryptocurrency casino project that brings something different to the table. This cryptocurrency casino is coming to a virtual world called Decentraland, with the district where it will be located is called “Vegas City”.
This is just one of the many opportunities that Atari is exploring in a variety of virtual worlds. The goal of the Ethereum-based virtual world is to replicate a real-life gambling hub like Las Vegas.
Atari is working alongside Decentral Games to build out the casino side of the offering. Decentral Games has support from the Digital Currency Group, which is the major investment firm that is also the overseer of Grayscale. This article will take you through all the core aspects of this exciting project.
Atari’s History
Atari is a video game company that has been around since the early-1970s and has been at the forefront of many technological improvements over the decades. It is often credited for starting off the modern video game industry as we now know it through the release of games like Pong.
It subsequently launched many other notable games over the years, such as Asteroids and Space Invaders. There were numerous spin-off game development companies and console manufacturers that came from Atari.
While the company hasn’t done a whole lot in recent years, it is now eying up another major market that is set to massively disrupt the gaming space. Its blockchain division has been looking at a variety of opportunities in the space and has developed its own cryptocurrency called the Atari Token. It is now dipping its toes into the virtual casino space.
What Are Crypto Casinos?
Crypto casinos and Bitcoin gambling sites have been growing massively in popularity over the past few years. While they hold a lot of similarities to the regular types of casino sites that you are probably used to, there are also some stark differences.
As the name suggests, they will mostly cater to cryptocurrency transactions. This allows for much faster, cheaper, and more secure payments to online casinos. The platforms are also not as confined as many of the traditional types of online casinos that you will find.
This means that there will be bigger and better game libraries, more lucrative bonuses, and a more straightforward signup process. Now the next step in the world of crypto casinos are these types of platforms that will be up and running in the metaverse.
Atari Token and NFTs
It looks like the new Atari virtual casino will support Ethereum-based tokens like the Atari Token. There will be prizes paid out in cryptocurrency as well as through NFTs. Atari will be looking to get a good level of coverage for its new token and NFT collection as a result of them featuring as part of the virtual casino offering.
It has entered a partnership with leading blockchain gaming platform Enjin to help launch the NFTs through the Fabricant digital fashion house. There will also be the creation of Atari-branded blockchain games through licensing agreements as a result of the partnership with Enjin.
What Games will Atari’s Casino Feature?
The Atari casino is set to feature several of their classic game titles as well as a lot of the typical types of games that you might expect to find at any type of online casino. It is likely that they will include slot games, poker, blackjack, roulette, and baccarat.
There will likely also be some niche titles that have been developed through the partnership with Enjin. Therefore, a lot of exciting times lay ahead.
The Virtual Real Estate in the Metaverse
The concept of virtual real estate in the metaverse has been gaining a lot of attention over the past few years. Many companies and individuals have been busy acquiring as much relevant digital land as possible. They often then rent out the space to those who want to offer some sort of product or service through the area.
For the home of the Atari casino, the company has leased a prime piece of virtual real estate in Vegas City. There are also some plans in place for Atari to build a type of virtual hotel in the future. Therefore, it appears that the company has a lot of ambitious plans for the space going forward.
Risk vs Reward (Is this the right choice for Atari?)
There is no way to answer this question with any degree of certainty, only speculation. There is no doubting that there is a lot of interest in the metaverse and what the future might hold for it. More companies are investing in the space, with the interested user base constantly on the rise.
Atari has a reputation for spotting something that others have failed to identify and being an early mover. While there is no guarantee of success, being an early mover in the metaverse could pay off handsomely.
It is a great way to make itself relevant once more and to get some publicity for its crypto and NFT offerings. They will also be able to showcase their catalog of games through an exciting new platform.
Naturally, there are also some downsides to consider. There is still a huge number of unknowns in the metaverse space. Atari might also run into issues with regulators regarding it casino games offering.
Therefore, it will certainly be very interesting to watch what happens with the Atari virtual casino and keep an eye on its success. There is certainly a future for virtual casinos, but it’s just a question of whether now is the right time for them or if that will come at some point in the future.
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Metaverse coins on Coinbase with huge growth potential
Published by The Coin Republic
Ahtesham Anis
April 17, 2022
Coinbase is one amongst the first crypto start-ups and nowadays it’s one of the outstanding exchanges that’s providing crypto commercialism services to international users. The exchange has been listing several potential products since then. This year itself it became the primary cryptocurrency firm that went public with a valuation of $100 billion. However, allow us to explore some potential metaverse coins that are listed on the exchange and might be listed easily.
Decentraland was launched in 2017 by Ari Meilich and Esteban Ordano. Running on the Ethereum blockchain, the 3D virtual world platform includes customizable activities, art and land. It aims to incentivize international users to participate in a shared virtual world, combining computer games and blockchain technology.
In Decentraland’s virtual world, players get and sell land while enjoying games and interacting with alternative users. The platform uses non-fungible tokens — or unique, non-interchangeable units of knowledge kept on a blockchain — and these NFTs represent Decentraland’s 90,000 plots of land.
Decentraland coin is one of the highest cryptocurrencies in terms of market capitalization. This past year, it’s been one amongst the simplest playacting tokens, with returns of up to 5,300%. Its growing quality has been oxyacetylene by luxury brands like Gucci, waterproof and prizefighter Vuitton coming into the metaverse via NFTs.
The Sandbox (SAND)
The Sandbox is best known for its 2 smash mobile hits The Sandbox (2011) and also the Sandbox Evolution (2016), that combined generated forty million downloads across iOS and Android. In 2018, developer/Publisher Pixowl determined to bring this successful User Generated Content gambling informatics and enormous community of creators from mobile to the blockchain ecosystem.
The project aims to disrupt existing game manufacturers like Minecraft and Roblox by providing creators with true possession of their creations as non-fungible tokens (NFTs) and reward them for his or her participation within the ecosystem.
The SAND coin worth prediction for 2022 from WalletInvestor sees it breaking the $5 mark in June. The positioning additionally suggests the coin may well be priced $6.65 during a year’s time and $21.67 in 5 years’ time.
ApeCoin (APE)
ApeCoin is the governance and utility token that serves the Bored Ape order community and connected communities. This bringing has been one in all the foremost anticipated within the NFT community because of the large quality of the Bored Ape order brand. it’s essentially being airdropped to holders of Bored Ape Yacht Club, Mutant Ape Yacht Club, and extra ones are allotted to holders that even have the Bored Ape Kennel Club.
Currently, there’s no true practicality of Apecoin except its membership in the ApeDAO, which oversees the governance of the ApeCoin token. However, the longer term reveals that there’ll be utilities for holders of the token, particularly once it’s combined with the underlying NFTs. These embrace a marketplace, potential games, and additional.
Apecoin doesn’t nevertheless have a giant following, however it is backed by some pretty big names. The first company that’s connected to ApeCoin is Yuga Labs, that is taken into account one in all the more well-known names within the NFT world. Even if it does not have quite a huge quantity of support, the future for ApeCoin appears quite bright, given the recognition of the complete product that it represents.
Stacks (STX)
STX is the native cryptocurrency of the Stacks network. It wants to fuel good contracts for Bitcoin, to reward miners on the open Stacks network, and permits holders to earn bitcoin by Stacking. Blockstack may be a project that utilizes blockchain technology to expand the functionalities of bitcoin by serving as a second layer protocol.
Stacks is a sensible investment to create some nice money. Stacks STX offers a novel advantage of mining on the biggest ever cryptocurrency network of Bitcoin with smart contract-based use cases.
Axie Infinity (AXS)
Axie eternity is an internet game universe revolving around Pokémon-esque creatures referred to as Axies. Players will collect Axies as virtual pets with aspirations to battle, breed, collect, raise, and build kingdoms for his or her Axies. What makes Axie eternity completely different from alternative online games is the synergism it’s established between normal online play and blockchain. The Ethereum-based game utilizes a style that permits players to possess their virtual assets, and for the sport to reward players who are able to reach a complicated level of skill.
One quality that produces Axie eternity, an honest investment opportunity, is the utility that the token has in powering the game. The sport presently has over 2.8 million daily players, with a thumping $3.6 billion of AXS listed in the game. As these numbers multiply, AXS coins might rise in value.
Theta Network (THETA)
Theta is computer code that seeks to incentivize a world network of computers to work as a suburbanised video streaming platform.
Today, content delivery networks (CDNs), geographically situated networks of operators, are paid to deliver video stream content to end-users. thanks to being restricted by their locations, existing CDNs can’t sustain with a lot of} high-quality streams.
The letter permits its global pool of users to relay videos by giving their spare information measure and computing resources and rewards them for doing so.
As more users are part of the letter network, more bandwidth is available, therefore increasing the streaming quality of the videos on the network.
letter has the most effective immediate globe use case of all the thousands of crypto coins. Video accounts for 2/3 of all net traffic. there’s a perpetually increasing demand for higher quality video, moreover because the potential for VR content to become more popular.
The same projects are some potential metaverses. These metaverse coins are listed on the Coinbase exchange platform.
https://www.thecoinrepublic.com/2022/04/17/metaverse-coins-on-coinbase-with-huge-growth-potential/
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The New Kid on the Block: High Stakes and Celebrity Endorsements in the Rise of Crypto Gambling
Crypto gambling has grown rapidly in popularity over the past two years thanks to marketing
Twitch streamers such as Trainwreck have made multimillion-dollar deals with crypto sites
The marketing exposure of the agreements is unparalleled but they also pose moral dilemmas
Rapper Drake has also fully embraced the gambling method, forming a partnership with Stake
Crypto gambling has its positives and negatives for players and regulators, but it’s here to stay
Published by VegasSlotsOnlineNews.com
Owain Flanders
April 16, 2022
Expanding its reach
Crypto gambling seems to be making the VegasSlotsOnline News headlines more and more these days. The gambling method – in which players stake cryptocurrency rather than cash – has grown immensely in popularity over the past two years, helped by a selection of celebrities and high-stakes players who have endorsed it.
50% of Bitcoin transactions are associated with gambling
Demonstrating crypto’s relationship with the gambling industry, around 50% of Bitcoin transactions are reportedly associated with gambling in some way. Meanwhile, experts have estimated that gambling-specific digital currencies have a combined value of more than $150m.
Now, crypto gambling also has an important role to play in virtual reality. In the Metaverse, gamblers can use cryptocurrency to play their favorite games, such as blackjack, roulette, and baccarat. In its first three months, the digital casino in Decentraland raked in $7.5m in revenue, and industry minds expect much greater profits than that in the future.
In light of its increasing importance in the gambling space, VSO News has taken a look at how this new crypto gambling trend has carved out a name for itself in such a competitive industry.
Bankrolling gambling Twitch
In the world of popular streaming site Twitch, high-stakes gamblers have a strong following. Texan streamer Trainwreck, otherwise known as Tyler Niknam, has amassed 1.8 million followers through his high-stakes gambling exploits. He placed second in the Twitch streamer popularity rankings in March, ahead of ninth-place Roshtein, another gambler with 914,000 followers:
great month of March, unfortunate timing for me having to step away from streaming at the height of my grind but it’s for a huge project I’m working on and it’ll be worth it when it’s done, the grind continues when i return on April 9 around noon pst pic.twitter.com/pL6yx4TsZ0
— Trainwreck (@Trainwreckstv) April 7, 2022
Like various other streamers, Trainwreck and Roshtein have deals in place with crypto gambling website Stake. The firm pays them to play, and they get to keep a portion or even all of their winnings. In February, Niknam revealed that his own deal with Stake is now valued at much more than the initial $1m per month contract he received when he first partnered the firm.
Although these gamblers are essentially employed by Stake, it doesn’t stop them from racking up substantial wins by putting millions on the line in one session. Just last month, Trainwreck broke the world record for a non-jackpot online slot win, bagging himself $22.5m from one spin. The following week, the Texan placed himself among the top roulette winners of all time by securing $3.75m from two spins.
A questionable area
What does Stake get in return for these incredibly costly contracts with Twitch streamers? Well, the marketing exposure these deals offer is truly unparalleled.
The vast majority of Niknam and Roshtein’s followers are likely gamblers or potential gamblers themselves. Added to this, despite his record-breaking wins, Trainwreck consistently reiterates that he is down millions of dollars in the long term – something probably true for all of gambling Twitch. After all, the house always wins in the end.
There is a morality issue
So, there doesn’t seem to be a downside to these deals, but there is a morality issue. The agreements could potentially see vulnerable Twitch fans lured into the gambling world by big-money deals between streamers and operators, especially if followers are not aware that the deals have been made in the first place. This is something that streamers such as Trainwreck have drawn light to in the past, recently taking aim at Roshtein in a rant about transparency.
Regardless of the moral issue, crypto gambling has certainly utilized Twitch to the best of its ability, positioning itself as the go-to gambling method for high-stakes stars.
Celebrity endorsement
It isn’t just Twitch streamers getting in on the crypto gambling hype, In the world of celebrity, no one has proven a better cheerleader for crypto gambling than Canadian rapper superstar Drake. He has consistently publicized his high-stakes gambling hobby on social media, and Stake is his operator of choice.
staked over $1bn since joining the Curacao-based gambling site
In February for instance, he bagged himself more than $298,000 betting on Super Bowl LVI. The rapper, real name Aubrey Drake Graham, wagered in excess of $1m on three bets. Other times, he hasn’t proven quite so lucky, losing $275,000 backing Jorge Masvidal to win UFC 272 last month. Drake has supposedly staked over $1bn since joining the Curacao-based gambling site in December 2021, placing a total of 7,498 bets.
Such is Drake’s support of crypto gambling that in March he announced a partnership with Stake, declaring the agreement “inevitable.” He shared a video on his Twitter at the time to commemorate the moment:
Drake x @Stake pic.twitter.com/vdkGDnp1wt
— Drizzy (@Drake) March 4, 2022
Boasting an Instagram following of 104 million and Twitter following of 39 million, Drake’s value to the world of crypto gambling is undeniable. Much like Twitch streamers, he has paved the way for the vertical to transition into the mainstream. With the rapper soon to announce a date for a live crypto gambling event, that influence looks set to only grow.
Both sides of the coin
Like most things, crypto gambling has both positives and negatives. It allows gamblers to wager without having to go through lengthy baking procedures, making transactions faster than anything other operators can offer. Then, the use of cryptocurrencies also increases the trust between player and operator with transactions registered in a blockchain framework.
The vertical can create a headache for regulators
However, crypto gamblers must also bear in mind that digital currencies are extremely volatile, unlike standard currencies. In addition, the gambling method can create a headache for regulators around the world. It allows players to remain anonymous and increases the possibility of gambling from prohibited jurisdictions.
Regardless of these issues, it’s clear that crypto gambling is here to stay. With the help of Twitch streamer deals and celebrity endorsements, the vertical has cemented its name in a highly-competitive industry. If crypto sites are able to capitalize on that growth, then the possibilities seem endless.
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The metaverse will be worth trillions
Published by The Finanser.com
Posted on April 7, 2022
I stumbled across an interesting white paper from Citi the other day saying that the metaverse is an $8 to $13 TRILLION opportunity:
“The total addressable market for the Metaverse could be between $8 trillion and $13 trillion by 2030, with total Metaverse users numbering around five billion. But getting to that market level is going to require infrastructure investment. The content streaming environment of the Metaverse will likely require a computational efficiency improvement of over 1,000x today’s levels. Investment will be needed in areas such as compute, storage, network infrastructure, consumer hardware, and game development platforms.
“The definition of what counts as money in the Open Metaverse is also likely to be very different from what counts as money in the real world today. Interoperability and seamless exchange between underlying blockchain technology are critical to ensure a frictionless user experience. Different forms of cryptocurrency are expected to dominate, but given the multi-chain trend in the crypto ecosystem, cryptocurrency will likely coexist with fiat currencies, central bank digital currencies (CBDCs), and stablecoins.”
The paper didn’t surprise me, as companies like JPMC are opening branches in the metaverse [Ed: a branch? What’s a branch?] , but I cannot get over the excitement here as the metaverse is nothing new. It started as the holodeck in Star Trek in the 1990s and then became Second Life in the 2000s. It is nothing new. Having said that, technology is improving every day and it will become mainstream, but what have we learned from Star Trek and Second Life?
The main one is that virtual worlds can be fun but, when it comes to money, it’s not fun. Here is why:
“Second Life’s popularity disappeared when their banking system collapsed in summer 2007. The banking collapse was a reaction to Second Life being forced to close down gambling facilities in their virtual world in July 2007.
“Until then, the website had been a phenomenon, growing from virtually no users to over 10 million in a year. This was incredible, and everyone felt it demonstrated the new emergence of business models.
“In particular, the fact that Second Life allowed real commerce to be transacted by converting real US dollars to virtual dollars, meant that everyone started to test commerce in virtual worlds through the service. For example, several banks invested in major projects in Second Life, including ING, Wells Fargo, SAXO Bank and Deutsche Bank.
“However, several banks also operated in Second Life that were managed by guys in their bedrooms. These included banks such as Ginko Bank, run by a Brazilian chap at home.
“The trouble Ginko Bank experienced started when internet gambling was forced to close under US Laws. The management of Second Life decided that they also had to close access to gambling in virtual worlds in July 2007 to comply with this policy, which led to a major run on the virtual banks.
“Until this date, a lot of the commercial transactions taking place in Second Life, where people converted real US dollars to Linden dollars, were for gambling purposes apparently. Therefore, the closure of gambling denizens in the virtual world meant that folks immediately started to take money out of the virtual banks, a bit like Northern Rock but worse.
“So imagine you are Andre Sanchez in Sao Paulo, the one-man band behind the virtual Ginko Bank. “You have over a million real US dollars on account, translated into around 275 million Linden Dollars that you are managing for the Second Life community.
“Suddenly, your customers demand their money be converted back to real dollars, and you drown in their demands so you just close down the virtual bank, leaving punters with losses of around $750,000 in real life.
“This led to calls for compensation from Linden Labs, who operate Second Life, but they said it wasn’t their job to regulate the banks.
“Result: Second Life’s popularity collapsed and, in a desperate move to rebuild trust, they said that only real life banks with real world banking licences can now operate virtual banks.”
My conclusion of that 2007 blog entry is that if you want to be a bank in the virtual world, you have to be a bank in the real world. I continually return to this Second Life story as it demonstrated the issue for all. The main issue is that the virtual world was unregulated. When Ginko Bank disappeared, Linden Labs – the creator of the Second Life platform – had demonstrators outside their offices for months, asking for their money back.
Initially, Linden Labs said it’s not our problem. Eventually, they changed tack and said if you want to be a bank in the virtual world, you have to be a bank in the real world, and that is the main message and lesson.
Now we are resurrecting Second Life and calling it the Metaverse, but nothing has changed. In the metaverse, people will have fun, but they will also invest and exchange money and value. As they do so, they will need a metaverse bank and a metaverse coin.
Whoever owns those platforms will be regulated and managed, in the same way as real world money. It does not mean that they are regulated and managed by a national government, as the government could be the network. It could be a cryptocurrency or a new world currency that the network endorses and accepts. After all, we only believe money is money and has value … because that’s what we believe.
https://thefinanser.com/2022/04/the-metaverse-will-be-worth-trillions.html/
Crypto casinos: How bitcoin opened up a new online gambling world
With little oversight, online casinos that offer ways to gamble using cryptocurrencies have thrived. Sometimes, all you need is an email.
Published by NBCNews.com
April 14, 2022, 9:01 AM PDT
By Kevin Collier
Online casino gambling in the U.S. is illegal in all but six states, kept in check by strict rules that make it hard for users to move money in and out of regulated internet casinos.
But those rules don’t hold up so well when it comes to bitcoin.
Internet casinos that offer users a way to gamble using cryptocurrencies are booming, sidestepping regulations while operating and advertising with near impunity. Dozens of websites operating outside the U.S. now offer a way to quickly begin gambling, many with few checks on users’ backgrounds.
“This segment has exploded in a very short amount of time, and as a decentralized system, it makes it even more difficult to figure out how to go after them,” said Alex Costello, the vice president of government relations at the American Gaming Association, a trade group that lobbies on behalf of U.S. casinos and registered sports betting companies.
“We are a highly regulated industry for good reason: anti-money-laundering concerns, responsible gaming concerns,” Costello added.
Those with gambling addictions have another reason — a lack of mechanisms to prevent them from playing. One gambling addict who spoke to NBC News but asked not to be identified said crypto casinos do not offer the same addiction-mitigation features as mainstream gambling services, such as being able to ban yourself.
“I’d done everything I could locally to stop myself from doing it, and all of a sudden there was this Hail Mary,” he said. “I could self-exclude 20 times and it wouldn’t make any difference, because you can just go back and make another account.”
Online gambling has broadly surged in recent years both in the U.S. and abroad. Twenty-two states and Washington, D.C., have legalized online sports betting. The online casinos that operate outside the U.S. and legally serve Americans have to register with each state where they operate, and often make an effort to verify their customers’ physical location. They take deposits through credit cards or bank transfers, in line with federal regulations to prevent money laundering.
Cryptocurrencies are also in the midst of their own boom, with companies jockeying to sell bitcoin, ether and a variety of other digital assets. One in 5 Americans has invested in, traded or used cryptocurrency, according to a recent NBC News poll.
Crypto casinos are similarly thriving. Advertising all manner of casino games, these websites often take typical payment methods such as credit cards in addition to bitcoin and ether, which can be used on digital versions of slots and roulette. All the crypto casinos that NBC News surveyed are not based in the U.S., making government oversight challenging.
“Online gambling that isn’t connected to a greater crime network has been viewed as a lower priority for the government’s limited resources,” said John Holden, an assistant professor at Oklahoma State University who studies gambling regulation.
That could change as the crypto casino market grows. A survey from Chainalysis, a blockchain analytics company, found that there are about 70 crypto-friendly casinos currently operating, and that they’ve received an estimated $2.8 billion so far this year. Last year, the industry pulled in $10 billion, Chainalysis found, which was a 64 percent increase from 2020.
There is no state where such gambling is legal.
“To date, no state has allowed gambling directly with cryptocurrencies,” Holden said.
A brief search on the internet would make crypto casinos seem like just another internet service.
Platforms like Twitch and YouTube are filled with influencers encouraging people to use specific gambling sites that take cryptocurrencies and with instructions on how to use a virtual private network to access sites that block people coming from particular countries. Sponsored content on the websites of several U.S. media companies, including Orlando Magazine, Men’s Journal, TheStreet.com, Mercury News and others, have recently promoted rankings of the best crypto casinos. Most of the websites promoted in those posts explicitly prohibit people in the U.S. from playing.
But many of those websites employ little or no effort to make sure those rules are upheld. Some only require an email address for registration, allowing users to send over cryptocurrency to fill their account and begin gambling almost immediately.
Many of the casinos either don’t check where people are visiting from, or can be accessed by anyone who uses a VPN to route their internet connection through a different country.
Costello said the American Gaming Association has raised concerns with the U.S. government but hasn’t had much luck.
“We’ve had conversations with federal law enforcement and state law enforcement on this issue,” Costello said. “Unfortunately federal law enforcement are a bit hamstrung, because these folks are obviously not regulated, not registered in the United States, and often not based in the United States, which often doesn’t allow for an easy prosecution.”
Crypto casinos can prove particularly harmful for people with gambling addictions, said Keith Whyte, the executive director of the National Council on Problem Gambling.
“Crypto gambling is just piling risk on top of risk,” Whyte said. “They are unregulated, and so they are likely to be unscrupulous operators with little or no consumer protection.
The gambling addict who spoke to NBC News said crypto casinos led him to relapse after he had previously stopped gambling. After identifying that he had a problem, he signed up for a service that allows people to pre-emptively block themselves from gambling at any registered casino or sportsbook. But he still watched gambling content online and through their promotions learned about crypto casinos as a workaround to the block. He then started legally buying cryptocurrency to feed his accounts.
Not only was there no way to stop himself, he said, but the websites also had none of the safeguards in place that often stop gambling addicts from making wild bets.
“It might not be that useful if you’re in the flurry of a gambling spree. But it’s the fact that there is a potential stop there,” he said. “Whereas with crypto casinos, they really do not care. They have no care in the world.”
The addict, who said he has fully since stopped gambling, said he eventually went tens of thousands of dollars into debt before admitting to his family that he was an addict.
“Something needs to be done about it, but it’s the crypto sphere,” he said. “What can you do, ultimately?”